"A single-price monopolist will always charge a price that is on the elastic range of its demand." Explain why the previous statement is correct or incorrect

What will be an ideal response?


The statement is correct. Only when the demand is elastic is marginal revenue positive. (When demand is unit elastic, marginal revenue is zero and when demand is inelastic marginal revenue is negative.) Because marginal cost is always positive, a single-price monopolist will always produce in the elastic range of its demand because it produces where marginal cost equals marginal revenue. Hence the price that the monopolist sets will always be on the elastic range of its demand.

Economics

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Economics

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Economics

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Economics